Indiana News

Rise of Alternative Fuels Throws Wrench Into Gas Tax Formula

Legislators consider alternate formulas for taxing natural gas, hybrids



Legislators wrestling with finding a way to raise money for highways are also confronting a related problem of how to compensate for a shift away from gasoline.


The primary source of road funding is a per-gallon gas tax. But as hybrids, compressed natural gas and other alternative fuels gain in popularity, the gas tax is bringing in less money. Muncie Senator Doug Eckerty and Greensburg Representative Randy Frye, both Republicans, have authored bills to tax alternative fuels by translating gallons of gas to an equivalent number of B-T-U's.

Eckerty says he conducted an informal survey of a dozen Indiana fleet operators over the summer who have either switched to natural gas or are considering it, and says all 12 supported the change as a means of ensuring roads are properly maintained.

Eckerty envisions owners of hybrids and electric cars paying a flat fee to the B-M-V, instead of attempting to calculate how much energy they're using to charge their car batteries.

A Senate committee put off a vote after encountering a snag over whether the proposal meets the legal definition of a revenue-raising measure. Revenue bills must begin their legislative journey in the House. If legislative analysts conclude the alternative-fuel formula qualifies, Frye's bill, which is similar but not identical, would take precedence. That bill has already cleared one House committee but is awaiting a hearing in the budget-writing Ways and Means Committee.


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